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Why manufacturing SMEs need ERP
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As SME manufacturers go global, ERP can help them respond quickly to changes in local market demand, improve business processes and benefit from economies of scale. James Flood of Exact examines why smaller manufacturers must match investment in new plants and sites with investment in enterprise business systems
A growing number of medium-sized manufacturers are benefiting from the opportunities afforded by globalisation. Having been adversely affected by the 2008-9 financial and economic crisis, which saw substantial closures and rationalisations, manufacturing SMEs now have the opportunity to drive a return to pre-crisis employment and output levels in the recovery period.
However, globalisation presents many operational challenges, such as a growing patchwork of IT systems, different cultures and business practices, multiple languages, and complex laws in different jurisdictions, to name but a few. Its also important for those with an international presence to be able to respond quickly and uniformly to changes in local market demand. Whereas service-led firms are able to overcome many of the barriers to international business via electronic means, manufacturers face the considerable task of coordinating the movement of physical goods and resources – whether personnel, raw materials or finished products – between sites, across borders and time zones in a timely manner.
And as they take in new sites, SME manufacturers will have to be just as effective as their larger counterparts in consolidating and exploiting their operations as a single global resource. This ensures their ability to pool capacities to meet orders, rationalise stock and supply across sites, and benefit from economies of scale when bidding for new business and negotiating contracts with suppliers. At the same time, smaller players must operate within the constraints of available budget.
There is general consensus that as the global recession eases, there will be a significant increase in ERP project activity as organisations reactivate postponed technology investment programmes and position themselves to take advantage of the economic upturn. Those getting a firm grasp of international operations, being responsive to changes in international markets and responsive to emerging markets as they crop up will be best placed to benefit from the ongoing process of globalisation.